The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamas’ US tourist stopover arrivals slumped to levels last seen in 1984 as recently as 2013, with the increase in cruise passengers “largely insufficient” to compensate for the loss of their higher-yielding counterparts.

The ‘State of the Nation’ report, the first phase in the formulation of this country’s 25-year National Development Plan (NDP), placed into context the impact that the 2008-2009 recession, and subsequent anemic recovery, has had on the Bahamas.

It discloses that the national debt, now standing at around $6.7 billion, has more than doubled in just the eight years since the ‘credit crunch’, and subsequent financial collapse and world recession, hit.

And the Bahamas’ international bank and trust company sector has also seen its assets halve over that time, dropping to $252.6 billion in 2014.

“The recent international financial crisis and subsequent economic slowdown have illuminated the structural weaknesses in the Bahamian economy due to its substantial reliance on a single sector – tourism – and the substantial reliance within this sector on a single country – the United States – for its prosperity,” the ‘State of the Nation’ report said.

“As a result, the economic downturn in the US has caused an even greater slowdown in the Bahamian economy. It could be said that the worsening economic situation of the Bahamas has in turn caused an increase in social disruption, poverty and crime.”

Examining tourism, and the increased competition from Cuba and rival Caribbean destinations, the ‘State of the Nation’ report said: “Declining arrivals in the lucrative stopover market is the strongest indicator of the fall-off defining the sector’s post-crisis performance: 1.36 million stopover visitors in 2013, compared to 1.53 million in 2007 and 1.46 million in 2000.

“Visitor losses included accelerated declines in arrivals from the US (7.4 per cent in 2007, 6.8 per cent in 2008 and 9.2 per cent in 2009), which accounts for more than 80 per cent of the visitor total. The deterioration in US arrivals was so drastic that the 2013 US stopover arrivals were at levels not seen since 1984.”

In contrast, cruise arrivals jumped to a 4.9 million record in 2013, but this did little to compensate for the stopover visitor decline.

“In terms of average visitor expenditure, however, the gains in the cruise market, (which in the past five years accounted for an average of just 15 per cent of the overall visitor spend total) were largely insufficient to make up for stopover losses,” the ‘State of the Nation’ report said.

“In 2013, the average per cruise passenger spend was estimated at $84.49, compared to an estimated average per stopover guest spend of $1,382. Key issues limiting the sector’s development were broadly categorised as ‘diversification-based’ and ‘planning needs’ issues.”

In financial services, the picture was little better, with the industry under pressure from both the recession and international regulatory issues.

“The offshore sector saw its high net worth client base move away from high margin products towards more conservative investments, including cash,” the ‘State of the Nation’ report said.

“International bank and trust company assets were $252.6 billion in 2014, almost half of the level seen in 2009. Institutional adjustments in both onshore and offshore segments trended towards the achievement of greater operational efficiency.

“This included consolidation of some operations and strategic re-alignments, increased outsourcing and job rationalisation, creating reductions in employment numbers and overall industry expenditure.”

And, on the fiscal front, the study added: “By the end of 2014, the national debt at $6.3 billion was nearly twice the outstanding balance of $3.2 billion in 2008.”